Coverage Expansion in the States: Challenge and Opportunity

Two sets of statistics recently released by the Urban Institute illustrate both the promise and the challenge of expanding health insurance coverage under the Affordable Care Act.

New results from Urban’s Health Reform Monitoring Survey (HRMS) reported that the percentage of uninsured non-elderly adults declined from 17.9 percent in September 2013 to 15.2 percent in March 2014. This translates to 5.4 million people who now have health insurance who previously did not, and these figures largely don’t capture the surge in enrollment that occurred at the end of March. These numbers, coupled with the reported 7.1 million enrollment in the federal insurance Marketplace, signal strongly that many Americans have gained coverage.

The Urban Institute also released state enrollment projections and eligibility estimates that offered some more room for optimism, but also a sobering counterpoint. First, enrollment is projected to increase significantly over the next two years. The Congressional Budget Office, the Urban Institute and many others have suggested it will take at least two years for awareness of coverage opportunities provided by the Affordable Care Act to widely disseminate throughout the eligible population. The national enrollment projection for 2016 is about 17.5 million—a considerable increase over the current level of enrollment reported today.

But the second major takeaway from these numbers speaks to the considerable gap between that projection of “full implementation” in 2016 and the estimated size of the eligible population. Even after excluding ineligible undocumented immigrants, Urban researchers estimate that only 53.5 percent of the eligible population will be enrolled in Marketplace plans in 2016.

The projections are generated using a simulation model that takes into account information about socioeconomic characteristics of the eligible population, such as income, employment, and health status, and how those characteristics affect the likelihood of enrollment. The model also takes into account state policy characteristics such as the extent of Medicaid coverage. The ratio of projected enrollment in 2016 to the eligible population can be thought of as an estimate of the projected “take-up” rate of marketplace plans. Not surprisingly, these rates vary considerably by state. In general, states where enrollment is higher relative to the eligible population are also states where the projected “take-up” is higher.

The comparison between Marketplaces run by the federal government, versus those run by states, is interesting to look at. While states with state-based exchanges have higher projected take-up rates on average (64 percent versus 53 percent), there is more variation among the federal Marketplace states. Only a handful of federal Marketplace states (such as North Dakota, Arizona, New Jersey) have projected take-up levels comparable to those of state Marketplaces, but in general, most have not been strong performers in terms of enrollment.

Not surprisingly, states that expanded Medicaid are projected to enroll a much higher percentage of their eligible population by 2016 (64 percent versus 48 percent), largely due to the impact of Medicaid expansion on the income distribution of the eligible population. So far, it would appear that whether or not a state expanded Medicaid affects current enrollment patterns, as states that expanded have generally higher current enrollment.

Recent data on insurance status is not available at the state level, but the release of the HRMS data shows that states that expanded Medicaid saw a larger decline in uninsurance compared with those that did not.

State variation in projected enrollment is clearly related to current enrollment experience, although there are some over- and under- achievers, as seen below. This pattern serves as a reminder that the promise—and the challenge—of coverage expansion will be experienced very differently across states.